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Blue Sky Alternative Investments (ASX: BLA) has announced it expects its full year net profit after tax (NPAT) for 2018 to be lowered by $7 million just a week after it abandoned guidance because of the turmoil caused by a highly critical short seller's report.
The Brisbane-based company says it has completed the first phase of its previously announced independent review of asset valuations, involving 12 of 93 assets managed by Blue Sky.
As a result of the valuations, the company has made a non-cash adjustment for reductions in accrued performance fees, but says there is no "material impact" on its fee earning assets under management (FEAUM) which was also announced last week as $4 billion.
Blue Sky also withdrew earnings guidance for FY18 last week along with guidance for its FEAUM for FY18 and FY19 and the company says this was done to allow for the release of today's first phase of asset revaluations which represents 25 per cent of FEAUM.
Its FEAUM was at the core of a report released by short seller Glaucus Research six weeks ago which described Blue Sky's valuations as "wildly exaggerated" and declared its "true" share price valuation was $2.56.
On the day the Glaucus report was released, BLA shares were around the $11.50 mark and since then they have plummeted to $2.68, sending the company into damage control.
In the past few weeks there has been two board purges which included the resignations of managing director Robert Shand and chairman John Kain, while financial services industry veteran Michael Gordon stepped down yesterday as a non-executive director for health reasons.
The company has started the search for a permanent managing director to replace interim MD Kim Morison, as well as new independent directors to fill out the board. Blue Sky says it hopes to have these positions filled before the AGM in October.
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